Persuasion Through Selective Disclosure: Implications for Marketing, Campaigning, and Privacy Regulation

Abstract

This paper models how firms or political campaigners (senders) persuade consumers and voters (receivers) by selectively disclosing information about their offering depending on individual receivers' preferences and orientations. We derive positive and normative implications depending on the extent of competition among senders, whether receivers are wary of senders collecting personalized data, and whether firms are able to personalize prices. We show how both senders and receivers can benefit from selective disclosure. Privacy laws requiring senders to obtain consent to acquire personal information that enables such selective disclosure increases receiver welfare if and only if there is little or asymmetric competition among senders, if receivers are unwary, and if firms can price discriminate. This paper has been accepted by Joshua Gans, business strategy.

A Review and Conceptual Framework for Understanding Personalized Matching Effects in Persuasion

“…Additionally, if consumers are marketing savvy (Friestad & Wright, 1994), they might be more likely to interpret a personalized match negatively (e.g., as a manipulation attempt) versus positively (e.g., as meaningful to me; Maslowska et al, 2013). Other research suggests that consumers' concerns about data privacy could also affect their reaction to personalized messages, where consumers higher in data privacy concerns are more likely to interpret a personalized match negatively (i.e., as an invasion of privacy; Hoffman et al, in press). Negative meanings are also likely if the message is too highly matched (e.g., it includes a consumer's prior transaction history; van Doorn & Hoekstra, 2013), or if the consumer recognizes that the information for matching the message was collected on a website separate from where the message is being delivered (Kim et al, 2019a).…”

Data Privacy in Retail

“…Although empowering customers with data privacy can help mitigate the negative impacts of breaches, in certain conditions, regulations that require full privacy can be detrimental to consumer welfare ( Taylor and Wagman 2014 ). Contrary to a general sense that privacy regulations are costly to firms, a recent study shows that policies that require firms to ask for consent to obtain customers’ personal information can benefit both consumers and firms, assuming conditions of asymmetric competition and price discrimination ( Hoffmann, Inderst, and Ottaviani 2020 ).…”

Competitive Information Disclosure in Search Markets

“…Li and Norman (2017) show that the result may fail if sellers move sequentially, use independent signals or mixed strategies. Hoffmann, Inderst, and Ottaviani (2014) suppose heterogeneous sellers simultaneously release information to win over a customer and show that competition increases information disclosure. In all these models, a buyer receives the market information and then chooses his action; in our model, the buyer must pay a search cost in order to acquire more information.…”